LHADRO & HARVEY

[2011] FamCA 1049

FAMILY COURT OF AUSTRALIA

LHADRO & HARVEY [2011] FamCA 1049

FAMILY LAW – De facto property dispute – small equity – undefended proceeding.

Family Law Act 1975 (Cth)

APPLICANT: Ms Lhadro

RESPONDENT: Mr Harvey

FILE NUMBER: MLC 5749 of 2011

DATE DELIVERED: 19 December 2011

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: 19 December 2011

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Stanley

SOLICITOR FOR THE APPLICANT: Richard Calley Family Lawyers

THE RESPONDENT: No appearance

Orders

1. That by 4.00pm on 25 February 2012, the respondent do all acts and things and sign all such documents as may be required to transfer to the applicant and/or her nominee at her expense, all of his interest in the real property at B Street, Suburb C (“the real property”).

2. That contemporaneously with the transfer of the real property:

   (a)     the applicant obtain a discharge and refinance the mortgage secured against the real property;

   (b)     refinance the parties’ Westpac personal loan into her name alone;

   (c)     indemnify the respondent against all taxes and outgoings in respect of the real property.

3. That by 4.00pm on 25 February 2012, the respondent vacate the real property and give vacant possession of it thereafter to the applicant.

4. That pending the transfer of the real property:

   (a)    neither party encumber the real property without the consent in writing of the other; and

   (b)    neither party increase the parties’ Westpac personal loan.

5. That pursuant to s 106A of the Family Law Act 1975 (Cth), a registrar of the Family Court of Australia at Melbourne is appointed to execute all deeds and documents in the name of the respondent and to do all acts and things necessary to give effect to these orders and the registrar shall be satisfied as to the need for such documents upon receipt of an affidavit by the solicitor for the applicant.

6. That unless otherwise specified in these orders and save for the purposes of enforcing any monies due under these orders:

   (a)     each party be solely entitled to the exclusion of the other to all other property in the possession of such party as of the date of these orders noting that the furniture, personal possessions and similar chattels in the real property are deemed to be in the possession of the applicant;

   (b)     each party be solely entitled to and the other relinquish any interest in any superannuation benefits belonging to or earned by that party;

   (c)     insurance policies shall remain the property of the owner named thereon;

   (d)     each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders;

   (e)     each party be solely liable for and indemnify the other against any liability or debt owing by them personally; and

   (f)   any joint tenancy of the parties in any real or personal estate is otherwise expressly severed forthwith by these orders.

7. That there be no orders for costs.

8. That a copy of these orders be served upon the respondent by post as soon as practicable.

9. That all applications are otherwise dismissed.

10. That the reasons for judgment this day be transcribed and be made available to the parties whereupon the solicitors for the applicant deliver a copy of those reasons by post to the respondent.

IT IS NOTED that publication of this judgment under the pseudonym Lhadro & Harvey has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 5749 of 2011

Ms Lhadro

Applicant

And

Mr Harvey

Respondent

REASONS FOR JUDGMENT

1. This is an application that commenced with proceedings on 30 June 2011.  That application was amended pursuant to an order of a Registrar when the applicant filed an amended application on 12 December. 

2. The initiating application was served upon the respondent and he failed to appear on 20 September 2011.  The Registrar’s order on that day indicates that she was satisfied that he had been so served.  The Registrar then adjourned the matter to 14 October again before herself and on that day the respondent again did not appear.  Having not appeared on two occasions and there being no indication of any interest in the proceedings by the respondent, the Registrar transferred the proceedings to the Registry in Melbourne and ordered that the matter be listed today.  The Registrar also ordered that the respondent file and serve a response and a financial statement by 25 November.  I note from the court file that the respondent has not complied.  The Registrar then went on to make further orders about the service of documents including orders and that they be served by post.  There is affidavit material on the file to indicate that the documents were served in an unsealed form, and I am satisfied on the evidence of the applicant that they have come to the attention of the respondent. 

3. This is an unusual case because the applicant and the respondent are still living under the one roof.  The respondent has not appeared this morning having been called and the applicant has given evidence to confirm that the respondent has received the documents.  Although initially indicating last week that he intended to appear today, the respondent told her last night that he had more important things to do, such as attend a break-up party.

4. The evidence of that intention is consistent with what he told her in July, where he said words to the effect that she could “get fucked”, and he called her a “slut” and a “whore” and that she was not taking his house.  He went on to say that no one was going to throw him out of his house and if she got the house then he would burn it down with the children in it. 

5. The evidence of the applicant is not challenged, and there is no logical reason why I should not accept it.  It says a lot about the respondent, particularly having regard to those statements that I just mentioned and the fact that he could not be bothered being here today because he had a Christmas party to attend.  One might conclude reasonably from that his view is that he really has no entitlement to pursue.

6. The applicant and the respondent have lived together in a de facto relationship since about June 1997, separated under the one roof in December 2009 and have remained in that state since.  They have three children aged 13, 10 and four.  All of those children live in their household. 

7. Section 39B of the Family Law Act 1975 (Cth) (“the Act”) confers jurisdiction on this Court to deal with de facto financial causes. That jurisdiction is subject to a number of requirements being fulfilled. One of them is that there is an instituted de facto financial cause before the Court.

8. Section 4 of the Act defines that de facto financial cause as a proceeding between parties to a de facto relationship that has broken down. The envisaged proceeding includes maintenance and the distribution of property. Those requirements are satisfied if there is evidence of the existence of, and ending of, a de facto relationship. For jurisdictional purposes, the ending must be after 1 March 2009.

9. Section 4AA describes the various indicia of such a relationship.

10. I am satisfied that the Court has jurisdiction to determine this matter both geographically and by virtue of the nature of the relationship, particularly having regard to the matters set out in the affidavit filed 8 December. 

11. The application seeks property orders.  In essence, the only property that the parties own is a home which has been valued at $310,000, but that is encumbered by a bank mortgage to almost $220,000 and a personal loan to the bank, the purpose of which is unclear from the affidavit.  It does not matter in this case because the applicant has indicated that in a refinancing operation she will take that debt on board. 

12. As such, there is less than $90,000 in equity between these parties in their house. 

13. The only other asset of any substance is a motorcar which the applicant has valued at $1100 by using the Red book.  Whilst that is not the most strong method of valuation, I will take it as an admission against interest, particularly having regard to the fact the respondent is not here to dispute it.  On that basis it adds little to the asset pool. 

14. Subsequent to the parties separating under the one roof, the applicant has also received some D Pty Ltd shares as a gift from her mother.  Having regard to the nature and the timing of that gift, I propose to ignore those particular shares.  Apart from that the only other interest that the parties have in property is their respective superannuation entitlements. 

15. There is sufficient evidence to satisfy me that the respondent’s superannuation entitlement is about $40,000 and the applicant’s just under $5000.  The evidence of the applicant is that since the relationship began, she has suffered a number of health issues and, as I have already mentioned, she has given birth to three children.  The three children have been her primary focus but she has also worked during the relationship in causal jobs, particularly delivering newspapers.  She earns approximately $7000 per year. 

16. The respondent has also worked more or less full time during the relationship for a transport company and then in another retail position, but he lost this position because he stole from his employer.  He then obtained a job working for a building supply company but he lost that job too because he sold off the back of the truck.  Since 2009, he has been employed as a labourer and has been earning somewhere between 700 and $1500 per week depending upon the number of hours that he works. 

17. Notwithstanding the parties have been separated since 2009 under the one roof, Centrelink has been prepared to provide the major financial support for the applicant and the children by providing her with a pension and the family tax benefit.  That is somewhat odd because, having regard to the fact that the respondent has been in full-time employment since 2009, one would have expected that Centrelink would have required the applicant to immediately apply for child support, but, in any event, she is not receiving it. 

18. On that basis, one might conclude that the respondent shows little interest in supporting the family.  That view is corroborated by the fact that the mortgage to which I have referred is already in arrears to the extent of almost $5000 and that has been accruing for some months. 

19. The unchallenged evidence is that the respondent made her lie to the bank because he had told them that he was going to gaol and therefore was not able to make the payments.  All of that is very odd in a household where he is working full time and being paid between $700 and $1500 per week and the applicant is on a pension.  Be that as it may, I can only deal with the circumstances as I find them.

20. To all intents and purposes, therefore, the major financial contributor to this family since the relationship began has been the respondent, and the major non-financial contributor has been the applicant.  She has also contributed her financial resources where she could.  Both parties have contributed their earnings at various stages through the compulsory superannuation process and that is how they have ended up with the particular amounts that they have. 

21. The application, which I am satisfied has been served on the respondent, seeks an order that the respondent transfer to the applicant all of his interest in the property.  That interest is less than $90,000.  In return, the applicant proposes that she will refinance the mortgage and the personal loan and take over any other debts associated with that property.  To give effect to such an order, however, she would need the respondent to leave because he will no longer be entitled to any equitable or legal interest in the property.

22. Counsel sought instructions from the applicant and she agreed that the respondent could have 60 days to get out of the property bearing in mind the season of the year. 

23. For the benefit of the respondent, he is to be out of the property by 4 pm on 25 February 2012. 

24. Those are the facts upon which I am asked to determine this case. 

25. This being a de facto relationship, the provisions of section 90SM apply.  What the Court is obliged to do is take into account the respective contributions that the parties have made not only to the assets of each of them, but also to the nature of the relationship that I have described.  There can be little doubt that the contributions between the parties have been much the same throughout the relationship, but subsequent to the relationship it would appear that the applicant has been the major carer of the children and the taxpayers of Australia have been the primary form of support.

26. Having regard to the nature of the pool of assets, I am satisfied that there ought to be a finding of 60 per cent to the applicant and 40 per cent to the respondent in respective contributions.  The same particular findings on the evidence can be made in respect of the superannuation interests. 

27. Section 90SM requires that the Court consider the matters set out in section 90SF so far as they are relevant.  In this particular case, the matters set out in section 90SF particularly favour the applicant.  The Court is obliged to take into account her age and state of health and also that of the respondent.  He has not bothered to file any material, so I presume that he has nothing to say.

28. The applicant on the other hand sets out in some detail her medical condition which, leaving aside her responsibilities for the children, would make it difficult for her to work on a full-time basis.  The income, property and financial resources of the parties are clearly set out in the evidence of the applicant but that is a one-sided picture, having regard again to the fact that the respondent has not bothered to tell the Court what his position is.  The Court is obliged to consider the physical and mental capacity of each of the parties for appropriate gainful employment.  Certainly since 2009, the respondent has been in full-time employment, notwithstanding his chequered history prior to that time.  I am satisfied that there is no impediment to him working on a full-time basis. 

29. Another factor that the Court must take into account is whether or not the parties have the care and control of children who are not 18 years of age.  In this case there are three children and the applicant bears the responsibility of caring for them on a full-time basis.  Each of the parties has the responsibility for those children, but I do not know what interest the respondent has in them or will have in them in the future.  Neither party appears to have any new relationship which would provide financial support, so it would appear on the facts that each of them will have the income and property resources that I am looking at now. 

30. I am obliged under section 90SF to take into account the eligibility of a party for a pension allowance or benefit under any Commonwealth Law.  The law requires the Court to look at some way in which, if it is at all possible, the community can be relieved of its burden by reducing the pension if the resources of the parties can assist a party who is receiving a pension.  In this case, having regard to the very modest amount of equity in the home, it would seem unlikely that the outcome of any proceeding here will affect the pension entitlement. 

31. A court is also obliged to take into account the standard of living of the parties that in all the circumstances is reasonable.  It is quite clear that the applicant has the responsibility of the three children and they need a home.  Again, without the benefit of the respondent telling the Court what his future intentions are, I can only conclude that he has no real interest in staying in that property.

32. I am obliged to take into account the duration of the de facto relationship and its impact upon the parties’ earning capacity.  In this case, it is a modest relationship and no doubt having regard to the fact that there are three children, it has affected the capacity of the applicant to obtain viable employment such that she would not be reliant upon the pension. 

33. One of the factors the Court is obliged also to take into account is the desire of a party to continue their role as a parent and wherever possible the Court must protect that wish, if it can be done, bearing in mind the pool of assets that the parties have. 

34. Another factor that the Court is obliged to consider is the outcome of these proceedings in terms of any order that might be made.  In this case, it is clear that the most valuable resource the parties have is the limited equity in their home.  It would seem on the material that the applicant has the capacity to support the mortgage payment and if she cannot, then the property will have to be sold and the limited equity will probably not entitle her to get back into another property.  To that extent I should give her every opportunity to retain the property if she can. 

35. Where the pool of assets is very small, the factors in section 90SF become very important.  It is not the percentage outcome which is important but the underlying value of the order itself that must be just and equitable. 

36. A court cannot make an order unless it is satisfied that it is just and equitable to do so.  In this case, the unusual feature is that apart from the equity in the home, the most significant resource that the parties have is their respective superannuation entitlements.

37. Clearly, the respondent could not retire on the amount of money that is currently sitting in his accumulated fund, nor could the applicant.  But having regard to their ages, it will be a long time before they will benefit from those particular interests.  Be that as it may, the respondent’s interests will continue to grow providing he continues to work.  This is a case where an adjustment should be made in favour of the applicant because of the fact that she has the three children, is entitled to a pension and has a long period of time ahead of her before she would be able to obtain employment of any substance.  That employment is very doubtful having regard not only to her children responsibilities, but also her health situation. 

38. I am satisfied that this is a case where percentages are really meaningless, the appropriate and just and equitable order is that she have the equity in the home subject to taking over the debt, both in the mortgage and the personal loan, as well as retaining her car and other assets in her possession.

39. There is little point in making any superannuation splitting orders because they cannot benefit the parties in any way at this particular time.  On that basis I propose not to make a specific finding as to the matters set out in section 90SF in terms of a percentage but rather to find that the equity in the home is an appropriate division having regard to all of the matters that I have set out.

ORDERS DELIVERED

1. I will add to the reasons the following. An application has also been made under section 106A of the Act that a Registrar be appointed to execute all documents in the name of the respondent, having regard to his rather flippant attitude to what is a very serious problem. I have no confidence that he would carry out any order anyway. He has failed to comply with orders and has thumbed his nose at the Court, so I see no reason why I should not make an order under section 106A.

RECORDED:  NOT TRANSCRIBED

ORDERS DELIVERED

I certify that the preceding forty (40) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 19 December 2011.

Associate: 

Date:  13 January 2012